Will Facebook Always Be Free? Probably Not For Everyone!

Recently, I’ve been spending a lot of time looking at the Terms of Use pages created by various social media platforms. After the recent controversy surrounding the Pinterest Terms of Use, I thought it might be a good idea to dig deeper into some of these mind-numbingly boring legal documents to see what other nuggets might be hiding amongst the legalese.

Periodically, someone in my Facebook feed will post a link to a Facebook Page about the “Keep Facebook Free Revolution” or “Stop Facebook from charging $4/month“. Until this point, these have all be hoaxes that tend to generate a lot of Likes and Shares, because people want Facebook to be free and get irritated when they hear rumors of Facebook proposing charges.

In fact, Facebook has done a pretty good job of reassuring users that they will continue to be free by posting it on their blog and by posting it clearly on their login page.

Will Facebook always be free for everyone? Their Terms of Use indicates otherwise.

Obviously, the tradeoff to Facebook being free is that they have to monetize the site through Ads. This means ads in your timeline and ads in the right-rail of the site. For the most part, I think users are okay with the ads, as long as they are targeted to their needs and aren’t obtrusive to interacting with Facebook. Up until now, however, Facebook has had the luxury of being a privately-held company, which means they aren’t beholden to the whims and fancies of public investors. With that about to change, I have grown more curious as to how they will handle the pressure from their public investors to generate revenue.

Which leads me to the nugget!

Buried deep in the “Special Provisions Applicable to Developers/Operators of Applications and Websites ” section of their Terms of Use, is a provision that says:

14. We do not guarantee that Platform will always be free.

Wait…what?

I just logged in and the front page of Facebook clearly indicated “It’s free and always will be.” Right?!? Free…always?!?

The disparity between the two likely lies in the target audience. By stating “It’s free and always will be.” on the front page of Facebook, the company is communicating to end-users that they intend to keep Facebook a free resource for general users.

The statement of “We do not guarantee that the Platform will always be free.” is more targeted at the development community, indicating that the ability to build apps that integrate directly into Facebook might come at a charge in the future. While game developers like Zynga (the makers of Farmville) and nearly every brand page out there currently enjoy the Facebook developer platform free of charge, this one line, buried amongst the legalese of the Terms of Use document, clearly indicates that these services could come with a surcharge in the future.

The question is how much, and whether brands and developers would be willing to pay to participate on Facebook. We know that social gaming accounts for a massive amount of time on Facebook, so if developers like Zynga found it more lucrative to publish their games elsewhere due to high charges by Facebook, would it also lead to a bleeding of Facebook users to other platforms? Who knows.

So, with that single provision buried in their Terms of Use, Facebook leaves a lot of questions unanswered:

Will Facebook start charging for access to their development platform?

If so, when will they start and how much will the charge developers, brands and publishers?

If Facebook does start to charge, will the costs drive developers, brands and publishers to other platforms?

If the developers, brands and publishers leave will Facebook users leave, as well?

While there hasn’t been any indication by Facebook that they’re going to start to charge developers any time soon, it could be something that we see arise soon after their Initial Public Offering (IPO), when the company becomes more beholden to their shareholders, rather than their users. I guess we’ll find out soon enough…

I think everyone has been okay with the ads up to this point. The problems start to arise when Facebook starts to charge developers. Then, to pass the costs along to the users, the developers start to charge for their games, apps, etc…or just fill their games/apps so full of ads that no one wants to use them anymore. Then, users start to get tired of Facebook, they start looking to other free platforms, and the spiral begins….

A lot of people think that Facebook will be around forever. But ask MySpace how that feels. And when’s the last time you bought something on eBay?

I’m not against FB charging the developers. It’s similar to charging for ad space. As long as they keep it free for the general users. Brands and companies reaching those huge numbers of users, probably expect to be paying for it. If FB starts charging, then other platforms will charge too. If you can charge, and the market will pay, you charge.

Once they have outside investors, they will be more apt to start charging to keep shareholders happy. It is the way of the beast, so to speak. If they are able to earn enough from advertisers, they may be able to hold out for a couple of years, but then the shareholders will be asking why there is no increse in their share earnings, and the hammer will fall. How hard is going to be determined on the number of shares Facebook decides to put on the market. The more shares they sell, the harder the hammer will fall. If it falls hard enough, even the users may feel the effects in a minor monthly fee being applied. Only time will tell.

Silly really unless the model chosen for revenue calls for R&D to be drawn back. Freebies may be like @Youtube ads all over the place. Split it off maybe Trackbacks would do the tric and leave Fb alone to those who made what it is – Us the users.
Thanks Sean

It depends on what they classify as a “user”, Jorge. I would argue that page owners, bands, businesses, non-profits, and local governments are just as much “users” of Facebook as individual account holders. If Facebook intends to meet the needs of their investors after going public, they may need to expand their revenues beyond just ads, which might make the development platform the next place to start charging.

Facebook’s statement to the end user is accurate and (I believe) always will be. As far as developers go, that’s a separate point that doesn’t conflict in the slightest. Will Facebook eventually charge developers who want to produce content for the platform? It’s quite likely. Will that cost be substantial enough to deter continued development? Probably not from any serious developers, as long as Facebook continues to provide access to such a wide and engaged audience. Facebook is a free site, but it generates crazy revenue precisely because of that audience, so any shareholders would have to be morons to push for major changes to the company’s successful mode of operation. That would amount to greedily killing the goose that lays the golden eggs.

You wouldn’t consider businesses, bands, authors, non-profit organizations, etc…as “end-users”? I think the statement that “It’s Free and Always Will Be.” is a bit deceiving if they start charging some “users” and not others.

Sounds like something the lawyers added. I cannot imagine that the developer community would take kindly for paying to develop FB apps. FB could however possibly support an app store for customers to purchase apps but only if they did something really worthwhile and not already provided.

hmmm… interesting. The word “free” is as misused recently as the word “live” TV. A recent advert on TV offered a phone “Free for just £28 per month”.
Language is more and more being manipulated to make it mean whatever a company wants.
FB is, slowly, digging it’s own grave, I think.

If they charge at some point so be it. I mean there is a sense of entitlement in the internet community that is unfortunate. In fact I think there is an entitlement to an entire generation now. As the saying goes, there’s no such thing as something for nothing. You’re gonna pay for it one way or another right? We’re getting something for free or more so we’re getting it to see a few ads (and more likely ignore them, and/or use adblocking technology) Seems we’re getting a pretty sweet deal.